No one becomes independently wealthy by investing in bank accounts alone. Bank accounts and savings accounts, especially those with high-yield interest generation, are great places to park your cash. Or, to create emergency funds. However, such returns on parked money are minimal, even at banks with great rates. The average interest range for most savings accounts, for example, ranges between 0.09% and just under 3%.
If you shop around, you’ll find most banks might offer 2.35%. I am not saying to eschew bank accounts. What I am saying is that growing wealth and maximizing returns require prudent investment strategies as well. One has to know how to save money and invest wisely to grow wealth. You can’t increase cash flow without doing one or the other.
Still, while saving money is easy enough to do if you are disciplined, investing wisely is a whole other matter. Also, while it takes time to learn how to invest strategically, it’s hard to do without enough money.
How Much Do You Need to Invest?
Most people think that you need thousands of dollars or more to begin investing. While having so much money to invest with is ideal, most people do not have so much money to work with. The truth is, since investing should always be treated as a long-term strategy, you don’t really need that much, to begin with. You can begin investing with as little as $5. Most penny stocks, which are attributable to new and close-to-failing companies, start at $5.
Or, or can begin investing online with many robo-advisor apps. There are even so-called, “spare change,” investing apps which uses the spare change left over from your purchases to invest.
Acorns is a financial investing app that allows you to invest your spare change after every electronic purchase. Technically, it’s a micro-investing app, since your investing collateral is spare change. It works like this: after you register on the site, you link your account with a credit card or bank account. This process is known as “round-ups.”
Every transaction you make with credit cards and bank accounts linked to your Acorns account will automatically be monitored and assessed. Any cents charged over a full dollar amount from your purchases is automatically invested in your pre-selected Acorns financial portfolio. Let’s say that you buy a pizza and soda for $5.35. Acorns will automatically round-up the purchase amount to $6.
Then, $0.65 will automatically be invested into your Acorns portfolio. You are given five financial portfolio categories to invest in: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive. Your spare change can then be invested in a variety of investments, like stocks, bonds, or ETFs, depending on your preferences. Acorns lets you invest in large company stocks, small company stocks, emerging market ETFs, real estate, and even corporate bonds.
With Acorns, there are zero account minimums or commissions for withdrawals. The fees are modest. You will be charged $1 monthly until your accounts reach $1 million. If you have accounts generating over a million dollars, then you will be 0.25% annually.
Acorns is best as an investment learning app. Since you are using spare change as investing capital, it may take a while to reach $1 million. Still, its not how much money you have, but what you do with it that matters. Acorns may be optimal for use with Millennials or older people trying to invest while making ends meet.